Traders are always looking for greater accuracy with their trading signals, so they can make bigger FX profits but the accuracy myth, is one of the biggest causes of trading losses. This may sound paradoxical because surely, if your trading accuracy is better, your profits will be bigger? Let's take a look at why this is not the case.

I know a famous trader who doesn't get in at the very start of trends nor does he bank out anywhere near the highs. Furthermore, he losses 70% of the time, so he's not to accurate but does he make money? Yes and it's a compound annual gain of 77%, over 5 years which is up there with the very best - so why does lack of accuracy not affect his trading?

Buy Low Sell High is not a Good Strategy to Use to to Make Money

Most traders believe, that to make money in FX trading they need to buy low and sell high. These currency traders become obsessed with getting in and out of the market, at the exact turning point so, they try to predict where these lows and highs might be.

The problem of course is of course, that FX price movement cannot be predicted. You will get a lot of people telling you that prices move to some higher order or that scientific theories work - but they don't. Forex prices cannot be predicted, as humans are emotional beings and not beings of logic and this makes Forex trading a market where you no certainty of what might happen next. Forex trading is all about trading the odds and nothing more but if you learn to trade the odds, you can win.

You have probably heard the old technical analysis saying, “a trend in motion is more likely to continue than reverse” and it's true. If you want to trade with the odds on your side, you should WAIT, until a trend is confirmed BEFORE, you get on board. You may have missed the very start of the trend but that doesn't matter, if there is thousands of dollars in profit ahead of you.

The smart trader realizes that, you should never execute your trading signals on prediction, you should wait for confirmation of the move – Why? Because, this puts the odds on your side and with the odds on your side, you can win.

The Concept of Running Profits and Cutting Losses

The ratio of winners to losers doesn't matter, what does matter is the profit your winning trades make in relation to what your losing trades lose. For example, if you have a $10,000 account and have 4 trades that lose $250.00 each and you have one winning trade which makes $2,000.00, you have covered your losses and made an overall gain with your FX trading system. This is despite losing four trades and winning only one! That's only a 20% success ratio but that doesn't matter, you have made money and profits are the criteria you are judged on.

There are many different ways to make money but all good trading strategies, will have sound money management to keep losses small and have the courage to hold onto long term gains.

If You Don't Kick at Goal You Won't Score

If you ask any great football striker they will all tell you to score a goal you have to have a shot on goal and they will tell you their not afraid to miss. The reason for this is they know they can't score every kick on goal but their not afraid to miss, because they are confident in their ability, to find the back of the net and the more times they try, the better the odds of them scoring are likely to be

If you are confident in your trading strategy, the number of losses don't matter - the relationship of the profit per trade on winners to the loss per trade on losers, is the most important criteria and this has nothing to do with trading accuracy.

Don't Seek Perfection Focus on Making Money

Today with the rise of the online trading, many vendors selling trading trading systems, claim they can predict the future and make you huge gains and furthermore, many claim 95% accuracy or more on their trades. These claims are not true and the only way these vendors can show profits is by back tested, simulations knowing all the closing prices.

When you trade Forex forget about, trying to predict the exact low or high or counting the winning trades to losing trades you have. Instead, focus on getting the odds on your side and making sure the ratio of your winners to your losers is wide enough to give you profits, you may bit be perfect but you can still make a lot of money.

So trading signal accuracy is not important, what you need to focus on is money in the bank.